Houston Strategies

Monday, September 28, 2009

How Houston stacks up on income and cost of living

I recently came across this document from Atlanta with a lot of interesting data comparing 17 large and/or fast-growing American metros, including Houston (hat tip to 'Rail Claimore'). Some observations:

We're one of only three cities that are both very large and the fastest growing since 2000, along with Atlanta and DFW. I don't think it's a coincidence that all three of the large, fast-growing metros are below the national cost-of-living average, and all of the large, slow-growing metros are well above it.

At 89.4 (vs. 100 for the national average), we have the lowest cost-of-living index of any of the metros, particularly dominating the grocery, housing, and misc goods and services categories (all three of which I think are directly related to our no-zoning, low regulation, hyper-competitive development environment). We're near the best in transportation and health care. Our biggest weakness is utilities, which is not surprising given our climate.

Speaking of utilities, wouldn't the smart growth argument say that density reduces those costs? Yet NYC has the highest utilities index of all of the metros at 145.

Our per capita income rose a respectable 15.2% from 2000 to 2005 to $39,199, above CPI inflation at 13.4%. Oddly, Dallas, Austin, Chicago, and especially Atlanta lagged far behind. I think that may partially reflect the dot-com crash.

Austin, Atlanta, Dallas, Chicago, and Philly lost boatloads of higher-paying jobs. Again I suspect the dot-com crash. Houston held up because we had less exposure to the tech crash.

Overall, Houston ranks strongly, even with most of the data before the run-up in oil prices. But a lot has happened since this 2005/2006 data. I imagine the housing crash combined with the recession would rearrange a lot of these rankings, although I still suspect Houston would hold up well (and Austin and Dallas would probably look better than they do here). If you come across similar documents with more recent data, please pass them along. Thanks.

Thursday, September 24, 2009

Why the feds should stay out of high-speed rail (and most transportation)

Set aside for a minute whether high-speed rail (HSR) makes sense or not on a cost-benefit basis. Regardless of whether it does or not (and some smart people are arguing not), I'd like to make the argument that federal funding has no place in HSR. Instead, it should be left to individual states or regional state coalitions.

The federally-funded interstate system was originally conceived for defense purposes - rapid mobilization - after Ike saw the German autobahns. Freight and people movement were obvious beneficiaries, over short, medium, and long distances. It is a comprehensive network that crosses state lines, which argues for federal involvement. The government made the minimal investment it had to make - road beds - and people/companies paid for vehicles and fuel. Fuel was taxed to pay for it all. If EZ-tag technology had been available at the time, I suspect they would have tolled it all instead to pay for it.

Airports followed a similar arrangement: government provides the landing strips and terminals while private companies provide the vehicles and fuel. Passenger ticket taxes pay for the infrastructure. As airports are a local decision, they are (mostly) paid for locally, although regulated federally for standardization and safety.

HSR is targeted at medium distances only, making it more of a state/regional decision (i.e. a small collection of states). It also requires huge subsidies, as the government provides the track, cars, and energy. There is nothing directly related that can be taxed to pay for it (like fuel taxes for roads and passenger ticket taxes for airports). You could try to tax the rail tickets, but if they were fully priced they would not attract nearly enough riders. So no matter how you slice it, in the end the government (i.e. taxpayers) will be paying the majority of the cost of moving each passenger. The infrastructure cost cannot be covered by direct user fees, as demonstrated in other countries.

Rather than compare HSR to the interstate highway system, the better analogy would be airports. Imagine if California said, "Feds, give us money to build a few airports in key CA cities and provide a subsidized government-run airline to provide frequent intra-state service where tickets are priced way below cost." Put that way, people would recognize the idea as absurd, and tell California to do it themselves if they think it's such a good idea.

The problem is that a simple program that made sense at the time - a federal gas tax to build an interstate highway system - has evolved into a Frankenstein monster of massive federal involvement in enlarged urban freeways, local rail transit, and now high-speed rail - areas where they simply do not belong. Local transportation planners have shifted decision making from "What are the best cost-benefit investments we can make to move people in our area?" to "How to do we grab our 'fair' share of the federal pie, regardless of whether or not the project is something we would consider with our own money?" And that is leading to a lot of boondoggles being built around the country, culminating recently in the famous Bridge to Nowhere in Alaska.

The answer? The feds need to get out of the transportation business beyond minimal maintenance of the interstate highway system (the basic four lanes - not the expanded urban freeways). Let local entities make local decisions on transportation investments, including funding, and a whole lot of waste will magically disappear.

America 2050 has a new report out recommending priority high-speed rail corridors (overview blog post). I find it strange that Houston-Dallas is the 10th highest ranked city-pair, ahead of all Chicago pairs, yet it still recommends HSR for Chicago before Texas. While I'm a pretty strong HSR skeptic, I appreciate their point that the two highest priority corridors are Boston-DC and the California coast, and if any HSR is going to happen, that's where the focus should be instead of sprinkling the money around the country in places that make far less sense. Of course, I also believe those places should pay for it themselves, rather than with federal money. Also check out the per-capita GDP rankings on pg.4, where Houston places a very strong 4th behind SF, DC, and Boston - and well ahead of NYC and Dallas. Hat tip to Victor.

"Take Houston Community College. Thanks in part to an aggressive outreach campaign, the school has the highest percentage of international students of any community college in the U.S."

Finally, if you haven't heard already, NPR was doing a series of stories on Houston last week (hat tip to Mark). This is the lead story, which contains links to the others. Two stories will particularly appeal to readers of this blog: this one on our approach to growth (including great comments by Rice prof Stephen Klineberg and Harvard professor Edward Glaeser), and this interview with Mayor White, which include discussion of energy efficiency, Ashby, light rail, and TOD.

I already mentioned that last item at the end of a post last week, but thought I'd mention it again since it was sort of buried at the bottom there.

Friday, September 18, 2009

Critiquing Gene Locke's Transportation Plan (and HRG, NPR)

Today I attended mayoral candidate Gene Locke's transportation briefing, during which he unveiled his transportation plan, which had the usual stuff (improve regional coordination, get more state and federal money, etc.) but also introduced a few novel items (including the cute C.H.O.I.C.E.S. acronym).

I also had the opportunity to attend the Quality of Life forum last evening, in which all the major mayoral candidates contributed their particular policy dish to a political buffet intended to appeal to the most democratic palette possible. Over the course of the evening, the mayoral candidates spoke about parks, trails, trees, water, visual blight, etc. So this one is easy to sum up: "We all support improving quality of life within tight city budget constraints." No news there.

Here are some of the Gene Locke plan points that jumped out at me, most of which I support:

Creating a "City Department of Mobility" and a Director of Mobility. Long overdue.

Syncing traffic lights across the city as well as regionally. Fantastic idea. Although, good luck with cities like Bellaire, West U., and the Villages, which seem to revel in making it as slow as possible to cross their cities. Of course, their motivation is understandable: they don't want the Houstonians' traffic. But then, we do control their water supply, so we might have some leverage there...

Expanding HOV service, which would mean longer hours, more Park-and-Ride centers, and, most importantly, increased service to business centers outside of downtown like Uptown/Galleria, Greenway Plaza, the Medical Center, and the Energy Corridor (a tough one because of widely spaced destinations).

Getting real-time bus status online. Locke mentioned an iPhone, but I think any plain cell phone should be able to text a stop number to Metro and instantly receive a text reply with the bus routes headed to that stop along with their estimated times of arrival.

Bring back the downtown trolleys. (And maybe also in Uptown and the TMC-Rice Village area.)

"Reducing bus fares to increase ridership." That one's a direct quote from the plan, which went on to say that the city would "also look at a pilot program to eliminate bus fares at certain times" (like rush hour). Similar to Bill King's op-ed, this concept could substantially increase ridership, reduce cars on the road, and speed trip times (no fumbling for money).

Promoting transit-oriented development, or "TOD," which can help accommodate growth without adding much traffic. Significantly, Locke does not support government planning to dictate how or where to build. "Let the market figure it out." Huzzah!

Accelerating commuter rail. My long-time readers know I have mixed opinions when it comes to commuter rail. Some lines may make sense in narrow circumstances, but economics tend to force the shutdown of any express buses that even remotely compete with the rail line, often leading to longer commutes for riders (more stops and transfers, slower net speeds, longer walks to their final destination).

In Q&A, Locke endorsed continuing Mayor White's Safe Clear program, a very successful program recently backed up by a study. As far as what to do with the 25% of Metro's revenue that they turn over for "general mobility" (i.e. street improvements), he believes that decision will be decided by the voters. Personally, he would like to see some flexibility in how it's spent to improve regional mobility. I don't see any of Metro's member cities wanting to give it up, including Houston Public Works, despite Metro's desire to redirect it to transit/rail.

Overall, a pretty good plan.

Speaking of mayoral candidates, Houstonians for Responsible Growth came out with their endorsement yesterday of both Annise Parker and Gene Locke, while, not surprisingly, taking some shots at Peter Brown. Chronicle coverage and Brown response here. Even though some people believe HRG = "evil developers against neighborhoods," they're really a broader collection of well-intentioned people that want to preserve the strengths -- including vibrancy, competition, and affordability -- of Houston's historical free-market approach to development. That includes reforming and strengthening deed restrictions to protect neighborhoods. And don't forget that developers transform underutilized land into better and higher uses by increasing property value, which adds to the city's tax base to support public safety, schools, libraries, parks, flood control, and infrastructure investment and renewal.

Finally, if you haven't heard already, NPR is doing a series of stories on Houston this week (hat tip to Mark). This is the lead story, which contains links to the others. Two stories so far will particularly appeal to readers of this blog: this one on our approach to growth (including great comments by Rice prof Stephen Klineberg and Harvard professor Edward Glaeser), and this interview with Mayor White, which include discussion of energy efficiency, Ashby, light rail, and TOD.

Of course, none of these cities' wealth or economic power have passed leading global centers like Tokyo, London, Paris, New York, Chicago, Los Angeles, Seoul, Singapore and Hong Kong. But our list of emerging global cities is clearly gaining on them – and with remarkable speed.

...

Not all our emerging cities are in the developing or former Communist world. North America boasts at least three genuine emerging world cities: Calgary, in Canada, and Houston and Dallas. These regional economies have been built around energy and expanding industrial power. They also have enjoyed rapid population growth. Last year, Houston and Dallas grew more than any other metropolitan region in the country; over the past decade, their populations have increased six times more rapidly than New York, Los Angeles, Chicago or San Francisco.

But it's not all a demographic game; cities like Phoenix and Las Vegas have similarly enjoyed rapid growth but do not fit on the rising global cities list. The key difference lies in the Texan cities' rising corporate power. Houston, with 27 Fortune 500 firms, has passed Chicago in the number of Fortune 500 companies, while Dallas, with 14, ranks third. Together, the two Texan cities account for about as many Fortune firms as New York, once home to almost a third of the nation's largest companies.

...

These emerging world cities also have survived the housing crisis much better than their national competitors. The growth of India and China has created an ever-richer market for commodities, as well as expertise residing in places like Perth, Calgary, Dallas and Houston, much of it built around commodity and resource extraction. The evolving ties between burgeoning world cities also spill over into the growing tourism industry in Perth and the expanding medical service complex in Houston.

Do you think he missed any? Atlanta? Others? Arguments for or against any of the choices? Let me know what you think in the comments.

Thursday, September 03, 2009

I recently came across this story on crumbling public support for the 2016 Olympics in Chicago, as the costs, risks, and hassles become more clear.

The Tribune/WGN poll is the first measure of public sentiment since Daley did an about-face in June, saying he would sign the standard host city contract giving the city full financial responsibility for any losses -- a move that triggered a firestorm of criticism. Until then, the city had been lobbying for amendments to the contract that would recognize the city's limited guarantees.

Poll respondents made it abundantly clear that they disapprove of Daley's promise of an unlimited guarantee in the event the Games lose money, with 75 percent opposed.

In a city already upset over the privatization of parking meters and worried about further cutbacks in government services, those respondents who talked to reporters expressed concerns about the economy, the cost of hosting the Games and traffic congestion.

Even a majority of those who favor the Olympics opposed using taxes to cover losses and were against the unlimited guarantee.......experts said the findings could hurt Chicago's chances.

"When less than half of the folks polled indicate they'd be willing to support the Olympics, that's certainly not an enthusiastic mandate for bringing the Games to Chicago," said sports finance expert Dennis Howard of the University of Oregon. "I can't speak for the IOC members who will be making the decision, but I'd be fairly certain this would not help the cause for Chicago."...The poll comes a month before the International Olympic Committee selects the host city for the 2016 Olympics. Chicago is competing against Tokyo, Madrid and Rio de Janeiro.

Sorry Chicago. I think they call it the "Winner's Curse" (they won the U.S. contest). London is also dealing with serious budget problems for the 2012 Olympics. All in all, it looks like a good thing we were bypassed.

Moving on to a few smaller items:

A Brookings study on increasing 'job sprawl', a big reason commuter rail makes less and less sense as fewer and fewer people (proportionally) work downtown. Some of the core points:

Only 21 percent of employees in the top 98 metro areas work within three miles of downtown, while over twice that share (45 percent) work more than 10 miles away from the city center.

Employment steadily decentralized between 1998 and 2006: 95 out of 98 metro areas saw a decrease in the share of jobs located within three miles of downtown.

In almost every major industry, jobs shifted away from the city center between 1998 and 2006.

Study: Reducing Traffic Congestion Would Spur Huge Economic GrowthHow much would your city's economy grow if its roads were free-flowing instead of jammed? A new Reason Foundation study by David Hartgen and Gregory Fields examines how reducing gridlock would increase economic output and worker productivity in eight cities across the country. In Dallas, getting rid of traffic congestion would boost the economy by $46 billion a year. Denver would get a $38 billion increase in Gross Regional Product if it had free-flowing traffic conditions. Atlanta, Charlotte, San Francisco and Seattle would all see more than $10 billion a year in economic growth if they prioritized infrastructure projects and eliminated severe traffic congestion.

About Me

Social Systems Architect and entrepreneur with a genuine love of my hometown. I cover a wide range of topics in this blog - including transportation, transit, economic development, quality-of-life, city identity, and development and land-use regulations - and have published numerous Houston Chronicle op-eds on these topics. I'm a Founding Senior Fellow with the Center for Opportunity Urbanism and co-authored the original study with noted urbanist Joel Kotkin and others, creating a city philosophy around upward social mobility for all citizens as an alternative to the popular smart growth, new urbanism, and creative class movements. I am a native Houstonian, 6th-generation Texan, attended Rice University for my BSEE and MBA, and a former McKinsey consultant and adjunct faculty member with Leadership Houston. I am currently the founder of Coached Schooling, pioneering a transformational new approach for a more effective and engaging 21st-century K-12 education combining the best elements of eLearning, home and traditional schooling. CONTACT EMAIL: tgattis (at) pdq.net - send me an email if you would like to receive these posts via email, or see the Google Groups signup box below.